Bond notes and bond coins were introduced in 2014 and since then they have lived 5 lives compared to the 9 lives cats are proverbial for. Without further ado, lets trace the incredible journey they have made thus far.
Bond coins as change
After multicurrency system everything was good currency-wise . We were in paradise. We were using the South African rand and US dollars for our day-to-day transactions.
However, there was a minor problem of shortages of change. When one bought stuff they were given things like sweets as change because we didn’t have the smallest denominations of multiple foreign currencies we used. That’s when the government found a backdoor to introduce Bond coins.
On 18 December Bond coins got into circulation “to buttress the multiple currency system through the provision of change”.
Bond notes as export incentive
Bond coins didn’t really change the currency market, particularly the informal currency market (black market) which was virtually dormant those days.
But two years later, on 16 November 2016 the government made a fatal mistake of introducing Bond notes. The bond notes were introduced on the pretext that they acted as an export incentive. That meant exporters and remittance receivers were given Bond notes (and coins) for every foreign currency they generated. As the government put it, ” it increased exports” and simultaneously increased forex generation for the country.
But the export incentive also increased the bond notes and coins in circulation. And since Bond notes was not real money, Gresham’s law kicked in: Bad money drives out good money. Money changers (the informal currency market/black market) entered business.
You may ask why Bond notes gave life to the black market and not the bond coins. The thing is bond notes are paper and they are easy to trade rather than trade coins. Are you cool with swapping USD $100 with bond coins worth $200? Nope. But with Bond notes that’s a no brainer, you can accept.
And again, the ever increasing supply of bond notes (which some say was beyond the quantity that was promised by the government) fueled the black market- so more bad money was taking over and pushing out good money.
Bond notes and coins as now electronic money ( RTGS)
Fast forward to 2018 and after the controversial elections, the Reserve bank separated real money( US dollars) from fake money (bond notes, coins and RTGS balances) in the form of Nostro Foreign Currency Accounts and RTGS Accounts.
By definition, RTGS stands for Real Time Gross Money which is an electronic form of funds transfer where the transmission takes place on a real time basis. But here we were calling coins and papers electronic money.
Bond notes and and coins as RTGS dollars- the unofficial currency
Enter February 2019, an epiphany comes down on the government to make it realize that bond notes and coins are not at par with the US dollar. It abandons the fixed exchange rate of 1:1 and leaves the invisible hand to determine the rate of exchange between the two currencies. That time we wrote that:
…..the way the RTGS dollars are being treated on the currency market overwhelmingly suggest that RTGS dollars are Zimbabwe’s new currency. So officially RTGS dollars are not Zimbabwe’s new currency but unofficially they are our new currency.
Bond notes as the official currency
After the President had given us a heads up that we are going to have a new currency in some months, we woke up on Monday with a new currency- the RTGS dollars was dressed in new clothes that made it the new official currency called Zimbabwe Dollars. That effectively ended the multicurrency system as the Zim dollar was made the sole legal tender of the land. We hope this is the final stop.